Harvard economist Jeffrey Miron on how your government effed it all up and how it is continuing to eff it up:

There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy. —President-Elect Barack Obama, January 9, 2009

With all due respect Mr. President, that is not true. Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

I’m a little late blogging about this, but the preceding excerpt is from a full-page ad taken out in the New York Times by the Cato Institute in January. It lists some 200 economists including 3 Nobel Laureates (take that Krugman) who are against Barack Obama’s stimulus plans. You can view the ad here:

http://www.cato.org/special/stimulus09/cato_stimulus.pdf

I recently read two opinion pieces regarding what to do about the economy, specifically, whether the government needs to spend more or less money.

In one of the pieces, Paul Krugman of the New York Times argues that this is not the time to be cutting public spending and investment. He says that state and local governments, since they are required by law to have balanced budgets, are trimming social programs and public spending in order to eliminate their deficits. This behavior, in turn, is exacerbating the crisis by downsizing the local safety net and increasing unemployment by eliminative public sector jobs.

In the other piece, Peter Schiff, writing for the Wall Street Journal, argues that the government is broke and really has no money to spend. It can only borrow money from the future, or in the absence of willing lenders, take it out of the current economy by printing money, and then put it back in somewhere else. He says that individuals, local, and state governments are responding to this crisis rationally by spending less, but the federal government wants to respond by spending more, in the form of a giant stimulus package.

Who do you agree with?